John Burns from is a great industry analyst. His firm posted the first significant research on a phenomenon currently experienced across the real estate industry called Housing Investor Mania 2.0. In some major cities like San Antonio, they are purchasing one in four homes fueled by iBuying. Bloomberg reports that one investment firm managing 24,000 rentals purchased 200 homes in the first quarter – 138 from OpenDoor, 52 from Zillow, and 28 from Offerpad.

Broker Public Portal Chairman, Alon Chaver, has written an excellent overview of how Corporate Home Buyers pose an immediate threat to home ownership which is having a ripple effect across the industry. Please read and share – article follows:

Are iBuyers good for consumers?

by Alon Chaver, BPP Chair

The real estate industry has faced disruption before, but remains extraordinarily relevant.

Why? Because the work of agents and brokers help individual sellers maximize the value of their homes at points of life transitions, and help individual buyers achieve the valuable goal of home ownership.

An open, publicly accessible, and transparent market for residential real estate remains a cornerstone of financial self reliance and familial stability in America, now more than ever.

But what should we do when we encounter an existential threat to home ownership? A  threat that could also destroy the fabric of the real estate industry and its ability to help consumers?

We read it in the news every day: For-Sale inventories are declining and prices are exploding.

Cash-rich corporations are out gunning desperate individual consumers with all cash offers to snap up more and more of the fewer and fewer homes available for sale.  Voracious and insatiably hungry, these corporations are now increasingly soliciting sellers directly and buying homes before they ever reach the MLS.

And increasingly these corporations are selling these homes to corporate landlords, off-MLS, and without ever making them available to families seeking homes to buy. Once these homes are converted to single family rentals, they rarely come back to the home ownership market.

The end result:  Home sellers are often denied the fair market value for their homes, and would-be home buyers are denied the opportunity to achieve home ownership.

In the process, these corporations are undermining the listing agent, their broker, and the MLS. The resilient system of cooperation and compensation that has delivered unparalleled consumer access to homeownership for generations of Americans is at risk of being eliminated.

Before we look at the numbers, let me address the most common responses.

Corporate buyers offer home sellers fair value for their homes

Perhaps, but when sophisticated corporations buy homes directly from individual sellers who are not represented by experienced listing agents and brokers, the power imbalance makes it very difficult for such sellers to negotiate a fair deal for their home.

While the initial offer price may be fair, negotiating with a sophisticated corporation demanding large concessions after the offer is accepted can be very hard for most consumers.

Think of an anxious consumer in need of fast cash and a certainty of sale, accepting a cash offer…..which is then quickly followed by a demand for large concessions.  Without representation by an experienced real estate professional, how likely are they to push back on the concession demands and negotiate a fair value for their home?

The “bird in hand” psychology of loss aversion makes it very hard for an unrepresented consumer to walk away from a cash offer they have already accepted, and push back on a predatory demand to negotiate a fair deal with a sophisticated corporation.

Traditional home buyers can successfully compete with corporate buyers and achieve home ownership

When corporations buy homes directly from unrepresented sellers and sell them to corporate landlords, inventory levels of homes available to the public through the MLS shrink.

How can would-be home buyers compete with all cash offers made by sophisticated corporate buyers, who reach sellers before they even talk to a listing agent or list the home on the MLS?

While brokers and MLSs struggle to create and enforce pro-consumer policies, such as the Clear Cooperation policy, to eliminate pocket listings and improve social fairness in housing, the rapidly growing numbers of single family homes “pocketed” by corporate buyers can readily dwarf the number of listings “pocketed” by agents and brokers.

The cost of so many homes never getting listed on the MLS is not “merely” the inequitable exposure to the select groups of home buyers, but the “locking out” of numerous consumers from the opportunity to achieve the American dream of homeownership.

Now for some numbers.

Almost one in four of all sales in Houston and San Antonio are iBuyers and other corporate buyers, according to a new Investor Mania 2.0 report. In Los Angeles, one in five homes were bought by institutional investors, and in Seattle and Nashville, it is nearly one in six. iBuyers may control as much as half of all home sales in markets like these within their buy box.

iBuyers are driving the explosive volume of pre-MLS and off-MLS sales. Bloomberg reports that one investment firm managing 24,000 rentals bought 200 homes in the first quarter: 138 were from OpenDoor, 52 were from Zillow, and 28 from Offerpad. The pipeline to Wall Street from Silicon Valley often means the homes never hit the open market,” Bloomberg notes.

iBuyer business methods are not just cutting out listing agents and denying consumers representation by a professional fiduciary; they are putting first-time home buyers on the endangered species list.

During the Great Recession, institutional buyers bought the least desirable homes, often foreclosures in poor condition. Today they are buying the most marketable homes, those most sought by would be home buyers.  Thousands of these homes are being turned into rentals, removing first-time home buyer inventory at a record pace.

That’s kicking first-time home buyers in the head as they are already lying on the ground, and all of this is happening in the name of serving consumers by arguing that fast cash is better than fair value for your home.

Like off-MLS consumer purchasing, institutional purchasing also fuels systemic inequity in homeownership, but on a far more massive scale as large numbers of homes are not exposed in the MLS to everyone. (Read this column by Redfins Glenn Kelman about what happens when listings skip the MLS).

Perhaps the greatest tragedy in this vicious cycle: taxpayers, through the Federal Reserve’s low interest policies, are subsidizing the low-cost of capital that Wall Street is using to beat tax-paying consumers in the competition for homes. Social policies designed to help every day Americans get through the pandemic, are also supporting Wall Street firms as they out-compete home buyers and turn homes into single-family rentals and erode homeownership.

The industry is in a fight for its life as these companies try to eliminate exposure in the MLS. As Lawrence Yun, chief economist at the National Association of Realtors, told Bloomberg, In that sense, the investors are an obstacle to the everyday buyer.”

This battle is just beginning. Bloomberg reports that JPMorgan Chase & Co.’s asset-management arm, Nuveen Real Estate and Brookfield Asset Management Inc., have committed “billions in new capital to single-family rentals since the pandemic began.”

The impact is widening. As Redfins Chief Economist Daryl Fairweather observed, Flush with cash, investors are able to snap up the homes that are available, and then turn around and rent them out to folks who can’t find a home or are priced out of homeownership. This is likely making the housing shortage even worse, and also means that individual homeowners sometimes end up competing with investors in bidding wars.”

As more corporations buy pre-MLS and sell off-MLS, the value of the MLS itself – which is often woefully underestimated – is further eroded.

There are many different views on the MLS, but it is hard to refute the consumer value the MLS industry creates by facilitating Broker Reciprocity – a massive “peer-to-peer” marketing platform for agents to market homes for sellers at very low cost.  Sellers in most other countries must pay large fees to market their homes because they have no MLS.

When corporate buyers cut out the listing agent, they create an unfair negotiating disadvantage for home sellers, but they also tear the fabric of Cooperation and Compensation – the low cost foundation of equitable access to homeownership.

The BPP’s mission is to help brokers and agents provide an exceptional consumer experience, and to do so, we must support the listing agents and brokers’ ability to represent sellers and help them get fair value for their homes. We must also support the MLSs so they can continue to facilitate Broker Reciprocity and deliver fair and low cost access to homeownership

Brian Boero at 1000watt once told a story about how people may lose their business but can retire with dignity because they owned a home. In America, we believe in homeownership because it offers every person a path to self-reliance. Thats why we put the tax breaks for real estate in place – not for Wall Street to exploit.

Please share your comments and thoughts on this topic by sending us an email at

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Alon Chaver, Chair of the BPP Board, is a serial entrepreneur, long-time industry tech executive and thought leader. Alon most recently served as the Chief Information Officer at HomeServices of America, following highly successful exits as Trulia’s Vice President of Industry Services and iHomefinders Chief Executive Officer. 

Alon Chaver Headshot